(Alliance News) - International Personal Finance PLC said Thursday its issued credit in the first quarter contracted 15% year-on-year, as the lender attempted to fight off the coronavirus pandemic.
Shares in the home and digital credit provider were 35% higher in London on Thursday at 62.47 pence each.
IPF said its group collections in the the first quarter were at 95% of budget, but only 87% in March. In April, the first month of the current quarter, collections have slipped to 76%.
"We made a solid start to the year and trading in the first ten weeks of 2020 was in-line with our expectations. Like many other organisations, Covid-19 has since impacted our business," Chief Executive Gerard Ryan said.
The company added: "Good operational performances were delivered by our European home credit and IPF Digital's established businesses, and we saw further improvements in our Mexico collections performance as we prioritised credit quality over growth. Both credit issued and collections were delivered in line with our financial plan until mid-March".
IPF said it took "immediate steps" to combat Covid-19.
Towards the end of the quarter and into April, collections performance in its European home credit businesses were increasingly affected as tighter restrictions were imposed on freedom of movement of individuals and debt moratoria were introduced, IPF said.
The company continued: "These tighter credit settings continue to be in place with lending now focused on our loyal customers who have strong credit quality characteristics."
As a result, IPF expects to limit credit issued in April to around 30% of its original budget.
For its European Home Credit unit, IPF expects April collections about 75% of original budget, following a 13% credit contraction in the first quarter.
In Mexico, credit issued was down 15% in the first quarter and April collections were at 81% of original budget.
For IPF Digital, the company said the unit was not materially impacted by Covid-19, but IPF still significantly tightened credit settings in the second half of March to protect credit quality and manage cashflow. As a result, credit issued contracted year-on-year by 21%.
"In the short-term, we have reduced the amount of credit issued, and our focus for new lending is now on our highest quality customers. We have introduced payment holiday options across all our markets to increase repayment flexibility for customers that have been impacted by Covid-19," IPF said.
April collections effectiveness is expected to be around 82%.
IPF said, at a group level, it entered the pandemic with a strong balance sheet and funding position.
IPF added: "We are focused on liquidity management actions so we are able to recommence growth when the time is right. The tightened rate caps and moratoria introduced in a number of our markets are all temporary and demand for credit is unlikely to reduce beyond this uncertain period, but we believe that the supply of credit will reduce.
"The lack of certainty around the timing of easing people movement restrictions makes it difficult to provide guidance at this stage on the group's financial performance for 2020."
By Paul McGowan; paulmcgowan@alliancenews.com
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Inter. Pers. (IPF)